Intro to Management Accounting and Cost Concepts/Behaviour Flashcards

1
Q

Differences between Management and Financial accounting

A

Management accounting is more internal, looks at owners, managers, employees. Focuses on both future and past info where financial accounting looks at just past

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2
Q

Changing role of MA and the management accountant

A
  • Technological advancements and breakthroughs such as Big Data and analytics (so accountant needs to play a role in ‘validating information’

Now, focus on value for customers and sustainability, accountants need to be prepared for this

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3
Q

Importance of ethics in MA

A

Builds trust, promotes loyal, productive relationships with users

CIMA has written codes of ethics which serve as a guide for employees e.g.: integrity, confidentiality

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4
Q

What is a cost objective

A

Any activity for which a separate measurement of costs is required e.g.: inventory valuation

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5
Q

What is a cost object

A

Anything for which cost data is desired e.g.: products, customers

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6
Q

What is a cost classification

A

Grouping together costs which share the same attributes

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7
Q

Direct vs Indirect costs

A

Direct costs are costs of things that directly link to the product e.g. for a car: radio, lights

Indirect costs are indirectly linked to the product, common to all products e.g.: for the car: cleaners, maintenance workers

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8
Q

What is the manufacturing overhead

A

Manufacturing costs that cannot be traced directly to units produced e.g.: tiny screws in cars

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9
Q

Prime cost =

A

Direct materials + direct labour

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10
Q

Conversion cost =

A

Direct labour + MAN OH

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11
Q

What is indirect materials and indirect labour

A

Indirect materials are materials necessary for production but not part of finished product

Indirect labour is all labour other than those who turn raw materials into finished products

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12
Q

What is a period cost

A

A non-stock related cost e.g.: marketing, administrative

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13
Q

What is a product cost

A

A cost that is incurred in purchasing or making the product

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14
Q

How do product costs go into the balance sheet

A

As assets and only go through the profit and loss when they get sold

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15
Q

How do period costs go through the profit and loss

A

In the period in which they are incurred, never in inventory

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16
Q

What are differential costs and revenues

A

Costs and revenues that differ among alternatives

17
Q

What are sunk costs

A

Costs that cannot be changed by any decision